Market players have a neutral to positive outlook on Infosys even as the bellwether was successful in declaring its first quarter results in line with the guidance.
Caution seems to be the buzzword for this stock as its future performance would hinge on how the new top management team led by Mr K V Kamath performs, said market experts.
In a result update to clients, Bonanza Portfolio has advised them to have a neutral stance on the stock till the time future management policy is clear, given the change in top management and uncertain external environment that is affecting the company's operating performance.
“The stock has been an underperformer and this will continue for another quarter,” said Mr Ajay Parmar, Head –Institutional Research, Emkay Global. “You can't ignore this scrip as the choices for investors who look at the IT sector as an investment opportunity is limited to four stocks – TCS, Infosys, Wipro and HCL.”
Experts observed that Infy's performance is not up to the mark given the high standards set by the company earlier. “The fact that volumes will increase at the cost of margins suggest that the quality of business is not improving and wage increases are also eating into their margins,” said Mr Arun Kejriwal, Founder KRIS research.
Prabhudas Lilladher, in its report to clients, expects a cut in earnings of two to three per cent after the first quarter of FY12. The brokerage has indicated that it would revisit its estimates after attending Infosys' earnings conference call.
Other brokers like Dolat Capital have put a buy rating on the stock while IFCI's brokerage arm IFIN has asked clients to hold the scrip.
The stock closed at Rs 2,794.25 to a share on the BSE down 4.27 per cent over its previous close while it lost 4.62 per cent on the NSE to close at Rs 2,791.55 to a share.